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Economics: It is a social science (human interaction). It explains people’s behavior in the marketplace. The Economy is the distribution (selling) and consumption (buying) of goods and services and how this affects businesses (companies) and people in a positive or negative way. The economy has ups and downs that create “The Business Cycle”.

Economic Indicators are data extracted from different sources from our everyday living, like the PPI “Producer Price Index”, (what producers of goods & services pay to create those goods & services), that provide information as to how the health of our economy is doing and in what stage of the Business Cycle we are currently in. The Business Cycle represents the stages of well being in our economy and it is mainly divided into four stages:

1.      Expansion: Also called Recovery.  When businesses, production of goods and          services, demand and employment are all increasing. Things are starting to flourish! Stock prices are starting to go up.

2.    Peak: Like a mountaintop; the economy reaches a maximum of business growth, production of products (goods) and services, demand and employment. Stock prices tend to be at their highest levels!

3.    Contraction: Also called recession and occurs when demand starts to decline (people are buying less and less goods and services). Companies start to lay off workers.

4.     Trough: Also called depression. It is a period of extreme decline in consumer demand & investments, business activity and the unemployment rate is very high (a lot of people without a job).    
 

Chapter 8 in the educational investment book InvestorWiz will teach you
all the basics of the ups and downs in the U.S. economy! 
Click on the picture or the blue wording to enter InvestorWiz!